Toronto Data Centre and Interconnection (DCI) Report for 2020.
Toronto is well on its way to becoming a major hyperscale market and this is having a profound impact across the entire data centre infrastructure value chain.
The first and most obvious segment to benefit has been the wholesale colocation market, which not that long ago, barely registered in Toronto. Hyperscale clouds first came to Canada via Montréal where the underlying operating costs are significantly lower than those found in Toronto. As as result, Toronto lagged behind Montréal during the initial wave of cloud builds. It was not until the last few years that things really started to move. Microsoft, Google, Oracle and IBM all have localized cloud infrastructure in both Toronto and Montréal, with Google and Oracle entering Toronto just this year and last. Notably, Amazon is still not in Toronto, but that will change sooner than later, and provide a further spike in supply and demand.
Hyperscale cloud is also driving the separation increasingly seen in the retail colocation market. End users continue to use colocation, but they want a way to connect directly to networks and the leading public clouds. Data centre operators that house intercon- nection platforms, and an ecosystem of networks and cloud on-ramps, address this requirement and are garnering steady and consistent demand because of it. This is to the detriment of providers that have a more traditional value proposition around space and power and reflects in the overall numbers.
There are of course, other drivers that leave us optimistic about the market’s long-term prospects. Toronto is an emerging technology hub supported by a wave of skilled immigration, data privacy is of growing concern and geopolitical tensions have positioned Toronto as a destination in the western hemisphere that is proximate to the United States but in a different jurisdiction.
The COVID-19 pandemic has added fuel to this fire. While the larger macroeconomic impact of the pandemic should not be overlooked and has served up some headwinds, it is accelerating trends already in motion that are favourable for hyperscale cloud and data centres. Interconnection demand has spiked and has become a part of more conversations between customers and providers, while cloud and content demand continues to surge and pushes the consumption rate of data centre capacity – something that will have to be continually replenished.
The Toronto data centre market generated $385.3m in 2020 and is projected to grow at a five-year CAGR of 16.1%. The market remains in an early stage of development, especially on the hyperscale side of things, but there remains considerable upside on the table. This has shaped the competitive landscape. Canadian telcos have largely exited and been replaced by US-based providers that are heavily resourced with access to low-cost capital, strategic customer relationships and strong operating track records and brand recognition.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in Toronto or find a service provider.
Read the 43-page PDF preview HERE.